Blackhall v SVC Vehicles Limited t/a Kiwi New Cars - Reference No. MVD 110/2017 (Auckland) [2017] NZMVDT 95 (25 July 2017)

Last Updated: 16 August 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2017] NZMVDT 95 Reference No. MVD 110/2017
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	RYAN BLACKHALL
		Purchaser
	AND	SVC VEHICLES LIMITED TRADING AS KIWI NEW CARS
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory, Assessor
HEARING at Hamilton on 21 June 2017 and 13 July 2017
DATE OF DECISION 25 July 2017
APPEARANCES
Mr R Blackhall, Purchaser Mrs L Blackhall, Witness for the Purchaser
Mr C Chand, for the Trader
Mr A McIvor, Witness for the Trader

ORDERS

1. Mr Blackhall’s application to reject the vehicle is dismissed.
2. SVC Vehicles Limited shall, at its own expense and within 10 working days of the date of this decision, replace the vehicle’s coolant temperature sensor and throttle body assembly.

100. SVC Vehicles Limited shall also, within five working days of the date of this decision, pay $85.01 to Mr Blackhall.

DECISION

[1] The vehicle has, or has had, faults with its engine, gear linkage, starter motor, coolant temperature sensor and throttle body assembly that mean it has not complied with the guarantee as to acceptable quality in s 6 of the Consumer Guarantees Act 1993 (“the Act”).
[2] Despite the numerous faults, Mr Blackhall is not entitled to reject the vehicle. Although the engine fault was a failure of a substantial character for the purposes of s 18(3) of the Act, Mr Blackhall did not exercise his right to reject the vehicle for that fault. Instead, he chose to have the fault repaired. The other faults with the vehicle are not unexpected in a 21 year old performance vehicle and do not justify rejection.
[3] The engine, gear linkage and starter motor faults have been repaired. Mr Blackhall is entitled to have the coolant temperature sensor and throttle body assembly faults repaired under s 18(2)(a) of the Act. He is also entitled to recover the costs he has incurred in having the vehicle’s faults assessed.

REASONS

Introduction

[4] On 11 February 2017, Ryan Blackhall purchased a 1996 Mitsubishi Lancer EVO IV from SVS Vehicles Limited, trading as Kiwi New Cars, for $15,995. The vehicle had an odometer reading of 108,420 kms at the time of sale.
[5] On the same day, while Mr Blackhall was driving home, the vehicle broke down. Mr Blackhall had the vehicle assessed by Auto Super Shoppe Otorohanga, who found that the vehicle was misfiring, the vehicle’s gear linkage bracket was held together with zip ties and its engine had developed a significant fault. Auto Super Shoppe Otorohanga considered that the vehicle’s engine needed to be rebuilt or replaced.
[6] The vehicle was returned to Kiwi New Cars who, with Mr Blackhall’s consent, rebuilt the vehicle’s engine.
[7] The vehicle was returned to Mr Blackhall in March 2017. Mr Blackhall noticed that the vehicle was misfiring, stalling and made a clunking noise when cornering. He notified Kiwi New Cars of his concerns and the company asked for the vehicle to be returned to it for further assessment.
[8] In response, Mr Blackhall rejected the vehicle and applied to the Tribunal to uphold his rejection.
[9] In June 2017, following a direction from the Tribunal, Auto Super Shoppe Otorohanga assessed the vehicle to determine the nature and extent of the faults with the vehicle. It determined that the vehicle had a fault with its coolant temperature sensor and that the starter motor required replacement. The starter motor was then replaced at Kiwi New Cars’ expense.
[10] This matter then heard by the Tribunal on 21 June 2017. At that hearing Mr Blackhall advised he had driven the vehicle to the hearing and that the problems he had experienced with the vehicle (misfiring, stalling and clunking noises) appeared to have ceased following the starter motor repair. After the hearing and before any decision had been issued, Mr Blackhall contacted the Tribunal to advise that the vehicle had stalled while he was driving home from the hearing and was now stalling regularly.
[11] I then convened a telephone conference between the parties, during which they agreed that Kiwi New Cars should have the vehicle further assessed and its faults identified. On 10 July 2017, Auto Super Shoppe Otorohanga found that the coolant temperature sensor fault had not been repaired. It also identified a fault with the throttle body assembly that it thought was likely to be causing the vehicle to stall. Mr Gregory, the Tribunal’s Assessor, agrees with Auto Super Shoppe Otorohanga that the vehicle is likely to have a fault with its throttle body causing it to stall.

[12] A second hearing was then convened. At that hearing Mr Blackhall maintained his rejection of the vehicle, claiming that the vehicle has had an accumulation of defects sufficient to justify rejection. Kiwi New Cars does not agree that Mr Blackhall is entitled to reject the vehicle. It says that it has repaired the significant fault with the engine and that the other faults are not sufficient to justify rejection and either have been repaired or can be easily repaired.

The Issues

[13] The issues requiring consideration is this case are:

• (a) Does the vehicle fail to comply with the guarantee of acceptable quality in s 6 of the Act?
• (b) Were the vehicle’s failures of a substantial character under s 21 of the Act?
• (c) What remedy is Mr Blackhall entitled to under the Act

Does the vehicle fail to comply with the guarantee of acceptable quality in s 6 of the Act?

[14] Section 6 of the Act imposes on suppliers and manufacturers of consumer goods "a guarantee that the goods are of acceptable quality." Section 2 of the Act defines "goods" as including vehicles.
[15] The expression "acceptable quality" is defined in s 7 as follows:

“7 Meaning of acceptable quality

(1) For the purposes of section 6, goods are of acceptable quality if they are as—

(a) fit for all the purposes for which goods of the type in question are commonly supplied; and

(b) acceptable in appearance and finish; and

(c) free from minor defects; and

(d) safe; and

(e) durable,—

as a reasonable consumer fully acquainted with the state and condition of the goods, including any hidden defects, would regard as acceptable, having regard to—

(f) the nature of the goods:

(g) the price (where relevant):

(h) any statements made about the goods on any packaging or label on the goods:

(ha) the nature of the supplier and the context in which the supplier supplies the goods:

(i) any representation made about the goods by the supplier or the manufacturer:

(j) all other relevant circumstances of the supply of the goods.

(2) Where any defects in goods have been specifically drawn to the consumer's attention before he or she agreed to the supply, then notwithstanding that a reasonable consumer may not have regarded the goods as acceptable with those defects, the goods will not fail to comply with the guarantee as to acceptable quality by reason only of those defects.

(3) Where goods are displayed for sale or hire, the defects that are to be treated as having been specifically drawn to the consumer's attention for the purposes of subsection (2) are those disclosed on a written notice displayed with the goods.

(4) Goods will not fail to comply with the guarantee of acceptable quality if—

(a) the goods have been used in a manner, or to an extent which is inconsistent with the manner or extent of use that a reasonable consumer would expect to obtain from the goods; and

(b) the goods would have complied with the guarantee of acceptable quality if they had not been used in that manner or to that extent.

(5) A reference in subsections (2) and (3) to a defect means any failure of the goods to comply with the guarantee of acceptable quality.”

[16] In considering whether or not goods meet the guarantee of acceptable quality, the Tribunal must consider the quality elements as set out in s 7(1)(a)-(e) of the Act as modified by the factors set out in s 7(1)(f)-(j), from the perspective of a “reasonable consumer”. The test is an objective one; it is not a view of those factors from Mr Blackhall’s subjective perspective.

The vehicle does not comply with the acceptable quality guarantee

[17] The vehicle has had faults with its engine, gear linkage, starter motor, coolant temperature sensor and throttle body assembly since it was sold to Mr Blackhall.
[18] I am satisfied that these faults mean the vehicle did not comply with the guarantee of acceptable quality in s 6 of the Act because it was not free of defects when it was supplied to Mr Blackhall and has not been as durable as a reasonable consumer would expect.
[19] In reaching this conclusion I acknowledge that the vehicle is a 21 year old performance vehicle that has travelled in excess of 100,000 kms. A performance vehicle of this age and mileage is not going to be free of defects. However, I am satisfied that a reasonable consumer would not expect these faults to be present when the vehicle was purchased, or to arise so shortly after purchase.

Can Mr Blackhall reject the vehicle because the defects are a failure of a substantial character?

Relevant law

[20] Mr Blackhall seeks to reject the vehicle. Section 18(3) of the Act sets out the circumstances in which Mr Blackhall can reject the vehicle. Section 18 of the Act provides as follows:

“18 Options against suppliers where goods do not comply with guarantees

(1) Where a consumer has a right of redress against the supplier in accordance with this Part in respect of the failure of any goods to comply with a guarantee, the consumer may exercise the following remedies.

(2) Where the failure can be remedied, the consumer may—

(a) require the supplier to remedy the failure within a reasonable time in accordance with section 19:

(b) where a supplier who has been required to remedy a failure refuses or neglects to do so, or does not succeed in doing so within a reasonable time,—

(i) have the failure remedied elsewhere and obtain from the supplier all reasonable costs incurred in having the failure remedied; or

(ii) subject to section 20, reject the goods in accordance with section 22.

(3) Where the failure cannot be remedied or is of a substantial character within the meaning of section 21, the consumer may—

(a) subject to section 20, reject the goods in accordance with section 22; or

(b) obtain from the supplier damages in compensation for any reduction in value of the goods below the price paid or payable by the consumer for the goods.

(4) In addition to the remedies set out in subsection (2) and subsection (3), he consumer may obtain from the supplier damages for any loss or damage to the consumer resulting from the failure (other than loss or damage through reduction in value of the goods) which was reasonably foreseeable as liable to result from the failure.”

[21] Under s 18(3) of the Act, Mr Blackhall may reject the vehicle where it has faults that amount to a failure of a substantial character. A failure of a substantial character is defined in s 21 of the Act:

“21 Failure of substantial character

For the purposes of section 18(3), a failure to comply with a guarantee is of a substantial character in any case where—

(a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or

(b) the goods depart in 1 or more significant respects from the description by which they were supplied or, where they were supplied by reference to a sample or demonstration model, from the sample or demonstration model; or

(c) the goods are substantially unfit for a purpose for which goods of the type in question are commonly supplied or, where section 8(1) applies, the goods are unfit for a particular purpose made known to the supplier or represented by the supplier to be a purpose for which the goods would be fit, and the goods cannot easily and within a reasonable time be remedied to make them fit for such purpose; or

(d) the goods are not of acceptable quality within the meaning of section 7 because they are unsafe.”

The engine fault is a failure of a substantial character

[22] The engine fault is clearly a failure of a substantial character. The vehicle had a significant fault with its engine on the same day Mr Blackhall purchased it and has had to be rebuilt. I am satisfied that a reasonable consumer would not have purchased the vehicle if it had been aware of the nature and extent of the fault with the vehicle’s engine.
[23] However, Mr Blackhall is not entitled to reject the vehicle because of the engine fault. In March 2017, Mr Blackhall agreed to have the engine fault repaired. Having elected to repair the engine, he cannot now reject the vehicle because of the engine failure.
[24] The remaining faults are not failures of a substantial character. Mr Gregory advises that they are each minor faults that have been or can be easily repaired. Consequently, Mr Blackhall cannot reject the vehicle because of any of those individual faults.
[25] Mrs Blackhall, who presented the case on behalf of her son, claimed that the fault with the vehicle’s throttle body, which causes the vehicle to stall, was a failure of a substantial character because it made the vehicle unsafe.
[26] I am not satisfied that this fault has made the vehicle unsafe. Mr Blackhall’s evidence was that the vehicle stalls when at a standstill. I am not satisfied that a fault that causes a vehicle to stall while at a standstill makes the vehicle unsafe. It would be a different story if the vehicle was stalling while travelling at speed or while turning across traffic. A fault that causes a vehicle to stall in those circumstances could well be unsafe. But that is not the case here.

The accumulated faults are not a failure of a substantial character

[27] Mr Blackhall may reject the vehicle if the accumulation of defects with the vehicle amount to a failure of a substantial character for the purposes of s 18(3)(a) of the Act.
[28] In Cooper v Ashley & Johnson Motors Limited,[1] the District Court stated that a purchaser may reject a vehicle where there had been an accumulation of minor defects, which in themselves could not be described as substantial. The Court noted that a point will eventually be reached where the purchaser could “say convincingly that he or she had no confidence in the reliability of the vehicle”.[2]
[29] It was this ground that Mr Blackhall pursued most vigorously at the second hearing. He says that he has lost all confidence in the reliability of the vehicle because of the number of faults that have developed in such a short time.
[30] The vehicle did have a significant fault - its engine failed. Mr Blackhall could have rejected the vehicle at that time but he chose not to. Instead, he agreed to have the engine repaired. As noted above, having elected to repair the engine fault, Mr Blackhall cannot reject the vehicle because of this fault.
[31] I am not satisfied that the other faults that have arisen with this vehicle, although a breach of s 6 of the Act, are so extensive or extraordinary that a reasonable consumer, fully appraised of the true nature and extent of the faults, would have reached the point that it had no confidence in the reliability of the vehicle sufficient to justify rejection
[32] Mr Blackhall purchased a 21 year old performance vehicle that had travelled in excess of 100,000 kms. Mr Gregory advises that performance vehicles of this age and mileage will almost always have faults due to their age and to the way in which they have been used over their lifespan. Mr Gregory says that the faults with the vehicle, aside from the engine failure, are ones that are not unusual in a Mitsubishi Lancer EVO IV of this age and mileage.
[33] On that basis, I am satisfied that the accumulated faults with this vehicle are not sufficient to allow Mr Blackhall to reject the vehicle under s 18(3) of the Act.

[34] I acknowledge that this was a finely balanced decision. Mr Blackhall raised a compelling argument for rejection, but I am just not satisfied that the faults that have occurred with this vehicle are sufficient, when combined, to justify rejecting the vehicle. Having said that, I note that a reasonable consumer’s tolerance with this vehicle would now have been thoroughly exhausted by the faults that have developed. If any further faults with the vehicle that breached the acceptable quality guarantee in s 6 of the Act were to be brought to the Tribunal’s attention, I anticipate there may well then be a different outcome.

What remedy is Mr Blackhall entitled to under the Act?

[35] Although he is not entitled to reject the vehicle, under s 18(2)(a) of the Act, Mr Blackhall is entitled to have the outstanding faults with the vehicle repaired.
[36] Mr Blackhall is also entitled to recover the cost of having the vehicle’s faults assessed under s 18(4) of the Act. In that regard, Mr Blackhall incurred a cost of $85.01 in having Auto Super Shoppe Otorohanga assess the vehicle’s faults on 9 June 2017.

Conclusion

[37] The vehicle has, or has had, faults with its engine, gear linkage, starter motor, coolant temperature sensor and throttle body assembly that mean it has not complied with the guarantee as to acceptable quality in s 6 of the Act.
[38] Despite the numerous faults, Mr Blackhall is not entitled to reject the vehicle. Although the engine fault was a failure of a substantial character for the purposes of s 18(3) of the Act, Mr Blackhall did not exercise his right to reject the vehicle for that fault. Instead, he chose to have the fault repaired. The other faults with the vehicle are of a kind to be expected in a 21 year old performance vehicle and do not justify rejection.
[39] Mr Blackhall is entitled to a remedy under s 18(2) and s 18(4) of the Act. Accordingly, the Tribunal orders that:

• (a) Kiwi New Cars shall, at its own expense and within 10 working days of the date of this decision, replace the vehicle’s coolant temperature sensor and throttle body assembly.
  
• (b) Kiwi New Cars shall also, within five working days of the date of this decision, pay $85.01 to Mr Blackhall.
  

DATED at AUCKLAND this 25th day of July 2017

B.R. Carter
Adjudicator

---

[1] Cooper v Ashley & Johnson Motors Limited [1996] 7 TCLR 407.

[2] Ibid, at 417.